Friday, October 19, 2012

Smoke and Mirrors on the Deficit

By Dale Bowling

Everyone will agree that the Deficit is an enduring problem. Republicans have pushed the story that Obama and the Democrats has raised the Deficit to epic proportions. According to them, entitlement spending, the stimulus, etc. have raised the Deficit $4 trillion over the last four years. They've repeated this so many times in so many places that people have almost begun to take it at face value.

This is malarkey.

As this blog has shown before, Social Security is not on the verge of bankruptcy. It's fully funded for the next twenty-five years and can't add to the deficit. Medicare needs some tweaking, but is not rushing to its impending doom by any stretch of the imagination. We has also shown that the Stimulus created millions of jobs and helped the economy avoid falling into a second Great Depression. It cost roughly $800 billion. Not a small amount of money, but not $4 trillion dollars either. And since 2010 when the Stimulus ran out, government spending has fallen to the lowest it's been in sixty years. Where do you suppose the Deficit came from?

If you guessed the same people who are blaming Democrats for this mess, you would be correct.

A few years ago, a Congressional Budget Office study identified four main causes of the deficit.

1) The Bush tax cuts which gave away and continue to give away trillions of dollars that could have gone to keeping things off the National Charge Card. And since Bush never met a spending bill he didn't like (remember that the Congress was Republican and kept churning out Bridges to Nowhere) costs were piled on the Deficit.

2) The wars in Iraq and Afghanistan which were the first wars in American history not to accompany a raise in taxes to pay for them. Americans got a tax cut! Guess where the trillions of dollars for the wars went? The Deficit.

3) Bush's prescription drug plan under Medicare. This benefit for seniors cost way more than it should have. It was structured as a big giveaway of taxpayer dollars to pharmaceutical companies since none of the ways of lowering costs (Bulk discounts from drug companies, purchasing cheaper generic drugs, importing cheaper drugs from Canada) were allowed. Would it surprise you to know that Big Pharma had contributed a lot of money to the Republicans and the Bush campaign in particular? If it would, you haven't been paying attention.

4) Lastly, the Bush Recession has hurt revenue in a big way that would normally pay for things, because people don't pay as much taxes if they don't make as much money. How did we get to the Bush Recession? Tax Cuts and Deregulation of the Financial Industry, primarily.

Yes, these are the same ideas that Mitt Romney just advanced as the ones which would save the US economy from the slow, but steady economic recovery we've been struggling to maintain and extend.

Since Republicans are primarily responsible for running up the Deficit, does it make sense to allow them to be the ones to clean it up?

The Republican stance on the Deficit reminds me of a quote by then President Bush, "Fool me once, shame Fool me twice, you don't get fooled again." 


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